Desktop and Notebook TCO Updated for the 21st Century

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Desktop and Notebook TCO Updated for the 21st
Century

• Martin Gilliland
• Principal Analyst
• ?October? 2003

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Key Issues

• What are the components of TCO and what affects
  them?
• What are the key drivers for reducing TCO? Does
  extending the life of a desktop PC out to four --
  or even five years help?
• Cutting through the hype, what is the real TCO
  impact of Linux?
• Why is TCO for notebooks higher than for desktops
  and what can be done to reduce the TCO
  difference?

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What Is TCO?

• TCO is the holistic view of costs across
  enterprise boundaries over time
• A quantitative means to understand the
  qualitative performance of the IS organization
• A comprehensive set of methodologies, models and
  tools to help organizations better
• Measure costs
• Manage costs
• Reduce costs
• Improve overall value of IT investments

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Desktop TCO Breakdown Win2000 Professional
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TCO Infrastructure Efficiency
Direct
Indirect
Labor
Capital
Labor
Fees/Other

• End User IS
• Peer/Self-Support
• Casual Learning
• Scripting/ Development
• End-User Training
• Satisfaction
• Downtime
• Planned
• Unplanned

• Management
• Network
• System
• Storage
• Support
• Executive and Administration
• Help Desk
• Training
• Procurement
• Development
• Infrastructure

• Hardware
• Servers
• Clients
• Peripherals
• Network
• Software
• Operating Systems
• Applications
• Utilities
• IS
• Acquisition
• Costs
• Depreciation
• Leasing
• Expenses
• Upgrades and

• Management and Support
• Outsourcing
• Maintenance Contracts
• Support Contracts
• Service Levels
• Performance and Service-Level Metrics

TCO
46
54
Efficient?
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Key Metrics for TCO
High
Labor
Optimal
TCO
Cost
Capital
Service Level
Optimal
Service Level
High
Low
Performance
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PC TCO Is Real
Leveraging best practices can lead to an 18 to
26 reduction in TCO
Annual Cost
4,800 to 8,000
What Process? Sneakernet High Management 100
Dispatched Help Users in Complete
Control Reactive vs. Proactive Helpless Desk
Starts With Process Software Distribution Asset
Management Remote Control Desktop
Lockdown Self-Healing
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Complexity Increases TCO
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Best Practices Reduce TCO
TCO Analysis Overview Manufacturing Company
10
8
Typical Cost
6
Cost in 000
Actual Cost
4
Target Cost
2
0
Hardware Software
Operations
Administration
End User Operations
Downtime
Cost Categories
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Reduce Complexity, Use Best Practices to Reduce
TCO

• Best Practices
• Change Management
• Operational Management
• Technology Planning
• Asset Administration
• Improved Training
• Appropriate Support Levels

• Reduced Complexity
• Standardization
• Lockdown
• Configuration Management Tools

Security Initiatives
TCO
No Policies No Processes No Virus Management
Extreme heterogeneity in hardware, OS,
applications, vendors
High rate of change
A Best Practice is a group of tasks that
optimizes the efficiency and/or effectiveness
(service level) of the process to which it
contributes.
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Extending Desktop PC Lifecycles Someones Going
to Pay for This
Lifecycle of Desktop PC
Average Annual TCO
Hard s
2,268
2,319
2,390
2,472
Soft s
2,916
2,948
2,970
2,863
5,306
5,268
5,238
TCO
5,335
Year 3
Year 4
Year 5
Year 6
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Current Research

• Desktop TCO profiles for years 4-5-6 The
  annualized TCO for a PC kept for three years is
  roughly the same as for one kept for four, five
  or six years. However, the costs shift from
  direct capital and IS costs to indirect end-user
  costs.
• Linux TCO on the desktop -- A Linux profile is
  included to help organizations compare against
  other Windows TCO profiles.
• The incremental cost of WiFi on Windows 2000 and
  XP notebooks The incremental TCO of WiFi varies
  depending on the type of user and the operating
  system. Windows XP handles WiFi considerably
  better, resulting in a lower TCO than Windows
  2000.
• An updated ROI calculation to justify the higher
  TCO of notebooks versus desktop PCs. For users
  who work outside the traditional office
  environment, the additional cost can be justified
  if the notebook facilitates even a few additional
  hours of work every week.
• The cost of disposal of PCs at the end of their
  lives PC disposal not only should become an
  ongoing part of day-to-day operations, but it
  should also be accomplished carefully since
  disposing of obsolete equipment can cost more
  money than the enterprise receives from selling
  it. . There are, in fact, both legal and
  economic risks to enterprises for improperly
  disposing machines. .

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The Three Faces of Linux Hype
Visibility
Linux on Desktop for mainstream business users
Linux on Desktop for mainstream consumers
Linux on Desktop for data entry workers
As of August 2003
Technology Trigger
Peak of Inflated Expectations
Trough of Disillusionment
Slope of Enlightenment
Plateau of Productivity
Maturity
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Myths of Linux on the Desktop

• Linux will be cheaper than Windows because
  StarOffice/OO.o can be used instead of MS Office
• Linux is Free
• No Forced Upgrades
• Linux will require significantly less labor to
  manage
• Linux will have a lower TCO than Windows because
  of available management tools
• Applications will be cheap or free
• Hardware will be able to be kept longer if Linux
  is used or older hardware can be used
• Transferable Skills

The Mythical Penguicorn
Permission to use/modify the penguin logo by
lewing_at_isc.tamu.edu and The GIMP
http//www.isc.tamu.edu/lewing/linux/
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Desktop TCO The Linux Factor
Unmanaged, fat client desktops, based on a 2500
user environment with a mixed user base (1 high
performance users, 20 knowledge workers, 74
structured task workers and 5 data entry
workers).
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Office Migration Costs Licensing Changes and
Microsoft Access
Per-User2,500PCs
O97/2000 to 2000/XP Standard
O97/2000to 2000/XP Pro
O95 to O97/2000/ XP Std.
O95 to O97/2000/ XP Pro
MS Office Std. to Sun StarOffice Std.
Typical BestCase
665
1,164
1,036
1,831
1,094
Typical Worst Case
1,328
2,447
2,118
3,825
2,585
Selected users

• Best shared with a PC or OS migration

• Access increases cost

• Dependent on documentation conversion costs

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Linux Desktop Migration Costs
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Linux Desktop Breakeven There is No ROI in Spite
Migration costs include the cost to migrate from
Microsoft Office to StarOffice and the
application development costs to move
applications from Windows to Linux or IE to a
generic browser.
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Desktop or Mobile? An ROI Decision
Productivity must be included in the analysis!

• An additional 1.5 to 3.5 hours per week
  (depending on salary level and usage patterns) of
  work enabled by a notebook will pay back the
  additional cost within one year
• Anecdotal evidence indicates that notebook users
  typically extended their work week in excess of
  these parameters -- on average, an additional 3
  to 5 hours per week

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Why Notebook TCO is Higher than Desktop TCO

• Higher purchase cost
• Shorter useful life
• Higher failure rate - more Down Time
• Higher system image development costs
• Higher Operations cost since support must be done
  remotely and often outside normal work hours
• Higher End-User Operations cost since a higher
  degree of self-support, casual learning and peer
  support is required

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Best Practices for Reducing Notebook TCO

• Minimize the number of notebook models deployed
  to minimize the number of system images, reduce
  Service Desk staff training requirements and
  maintenance costs
• Deploy XP Pro on notebooks
• Ensure that the Service Desk is available in all
  geographies and time zones visited by Traveling
  Workers. Ensure that warranty and break-fix
  repair have fast turn around for remote workers
• Use "mobile-friendly" management tools for asset
  management, software deployment, back up etc.
• Insist that vendors provide web-based support
  with patch, driver and update downloads readily
  available